How Can Insureds Protect Their Businesses?
From environmental exposures resulting from the shutdown to virus protection moving forward, there are some important insurance considerations to examine
COVID-19 has certainly become the center of news in 2020, completely changing the way we live and work. We have self-quarantined to slow the spread. Our daily lives have been halted. Businesses have struggled with employees unable to go to work due to state mandates or the lack of revenue causing their doors to close forever. We have discussed these impacts over the past several months, from disease progression to economic ramifications, but COVID-19 has also affected the environmental community.
Pollution concerns highlighted by the COVID-19 pandemic:
- Indoor air quality has been a concern as we transition from enclosed quarantine life to re-opening closed business. Studies have shown respiratory droplets from sneezes can travel at high velocities and fill a small room in seconds. Since this virus can potentially remain on surfaces for days, it is vitally important to keep our surfaces clean. But are there any potential disadvantages of cleaning too much? We need to keep in mind there is a balance as we start deep cleaning and sanitizing home and workspaces with increased frequency and with stronger disinfecting agents. While bleach is well known for its effective means of killing pathogens, it can also mix to produce chlorine containing toxic gases. These toxic compounds are known to have numerous adverse health, including respiratory and skin irritations. Bleach is not the only cleaning agent known to cause these toxic compounds; other potentially harmful cleaning chemicals may include ammonia, detergents, and other chemical cleansers. Maintaining proper ventilation is crucial in creating a healthy indoor air environment.
- Mold & legionella is a concern for closed business as water in pipes has been stagnant for many weeks, causing bacteria growth. Plumbing systems should undergo maintenance and inspection as businesses go back to normal operations. And with businesses shutdown for longer periods of time, small leaks or water issues that would normally have been discovered by employees or customers have gone unnoticed and may have turned into extensive water damage and mold.
- Illicit abandonment and illegal dumping have been a concern across the country as businesses may not have a close eye on their dumpsters and properties in general during this time. Due to the cost associated with proper disposal, small businesses and individuals illegally discarding hazardous substances has unfortunately become more common in these economic times.
How has the environmental insurance industry responded?
After the world health organization officially announced COVID-19 as a pandemic, the insurance industry immediately looked inside their policy language to see if coverages are offered or excluded. Is the term ‘virus’ defined? Is there an exclusion for ‘communicable diseases’? Which coverage parts are affected? Can business interruption be triggered? What about gray areas where virus and communicable diseases are not explicitly defined or excluded? How should we interpret silent coverage? How could a COVID-19 claim be traced or sourced? These are all routine questions that are still being asked. Some insurance companies have chosen to add exclusions midterm and at renewal as they never intended to cover these types of exposures. The environmental community saw several businesses offering to clean and sanitize public workspaces for COVID-19 from companies ranging from routine janitorial companies to restoration contractors and even entrepreneurs with no experience wanting to enter a “high need space.” Insurance companies are requiring detailed guidelines before offering their version of confirmation of ‘COVID-19 coverage’ for these contractors. Qualified disinfection contractors have a real opportunity to grow their businesses right now as they make our public spaces clean and safe again. Agents who write these contractors also have an opportunity to offer quality pollution coverage for these accounts. For these risks, insurance companies are looking for:
- Experience in infectious disease cleanup and / or medical waste cleanup
- Certified Industrial Hygienists on staff or prior experience
- Procedures that are approved by Certified Industrial Hygienists.
- Procedures that implement appropriate use of Personal Protective Equipment
- Procedures that discuss waste handling & disposal
- Protocols that abide by OSHA biological hazard guidelines
- CDC approved & Hospital grade disinfection products
How do businesses prepare for the future?
Every type of business and social gathering event is being affected right now, including nursing homes, office buildings, retail centers, churches, schools, sporting events, etc. Each organization will continue to develop and implement efficient health & safety protocols for social distancing, protective face masks, gloves, increased hand washing stations, and more readily available hand sanitizer. But what else can businesses do? What kind of financial planning is there to plan for times like this? For some businesses, Site Pollution Liability (also known as ‘Premises Pollution Liability) will be a financial tool for businesses to consider for their locations. Site Pollution policies are more commonly known for their beneficial mold coverage, and Business Interruption coverage is an enhancement that can be added to these policies as well. It is crucially important to review coverage language as no two pollution policies are built the same—every insurance company utilizes their own unique policy language.
We are already seeing new perspectives in understanding risk and exposures by insurance companies during this pandemic. After the economic impact of COVID-19, many businesses who endure will also change their perspective on pollution. More businesses will consider pollution coverage as a necessity to discuss, plan, and implement into their financial planning.
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